What is a Performance Management System?
The performance management system is a cloud-based software that comprises various technologies and methodologies to monitor and manage the performance of employees. Performance management should be fair, measurable, and aligned with the organizational goals and objectives.
Its purpose is to have a systematic feedback mechanism where employees are self-aware of their contribution, identify performance issues & skills gaps, etc. The managers use the performance management system to monitor, document, and evaluate employee performance. Moreover, it creates transparency, and timely feedback and enhances employee engagement.
Employers in SMEs and large enterprises are quickly switching from the traditional annual appraisal-based way of managing employee performance to the continuous performance management model (CPM). The CPM model allows frequent meetings, ongoing feedback, and one-on-one casual discussions to help employees stay on track with organizational goals.
Who uses Performance Management Software?
Managing the performance of employees is a crucial aspect of every company to ensure effective work management and higher organizational productivity.
The performance management system should be used by everybody in the company, regardless of their job profile, level, or salary. Employees, managers, and other HR professionals use performance management software.
The performance management system helps employees to work according to the performance parameters set by their managers. It specifies the gap between their current performance and the expected performance.
You can check the areas where you are lagging so that you can take necessary action within time for overall improvement in your performance.
Managers use performance management software to set the expected performance parameters and track their team’s overall performance. They are also responsible for ensuring that every employee diligently participates in the process to achieve desired performance results.
Moreover, they provide regular reviews and feedback on the employees’ performances. HR professionals use the performance management system to define specific HR processes.
They generally work closely with employees and their managers to cross-check that everything is working as per the plan stated in the performance management software.
HR experts conduct regular assessments to dive deep inside the performance management software to ensure the fairness of performance standards set for employees.
Importance of Performance Management System
Here is why the performance management system is essential:
1. Increases employee retention
Employee turnover has been the biggest worry among employers, primarily due to dissatisfaction with work. The performance management system overcomes this problem by acting as a backbone and providing much-needed support to the employees when they feel unmotivated.
With the help of a performance management system, employees get a clear purpose and career path for their individual growth. Moreover, it aligns them to work according to the company’s mission, vision, and values, encouraging them to perform better than yesterday.
As soon as they feel they belong to the company, employees consider the company’s problem by taking accountability for their performances. As a result, they work hard day and night to make the organization a better place, leading to their retention for years to come.
2. Boosts employee engagement
With the help of a performance management system, you can conduct regular feedback sessions, training programs, and recognition events and take care of employee needs. You can also add some personal & future growth opportunities for employees during the performance assessment.
It makes employees feel valued, belong, and supported to work better than before. Due to such a motivational experience, an employee’s overall morale increases, leading to employee engagement.
As a result, they feel 10x more satisfied with their job, which would eventually increase their productivity.
3. Provides clarity in the organization
One of the significant reasons behind non-performing employees in the company is needing more clarity of their job profile, roles & responsibilities. They aren’t aware of what is expected of them and what they are supposed to do, so they waste working hours.
With the help of a performance management system, you can clarify where employees stand currently, what organizational expectations are, and what can be done to fill that gap strategically.
Once the employees get this clarity, ask them to segregate the long-term goals into quarterly, monthly & biweekly goals to monitor their performances better.
4. Rewarding good performance
Everybody in the universe feels excited, happy, and motivated with the regular rewards & recognitions. Whenever an employee performs well, achieves even the smallest of goals, gives rewards to show the company’s love & affection towards them.
It will make employees belong to the company like a family and will encourage them to work even better with every passing day.
The rewards include Amazon vouchers, gift cards, incentives, paid holidays, a short trip, complementary offs, a lunch party, etc. When rewarded through these instruments, good employee performance reinforces them to maintain consistency and persistence in their work and make it ten times better.
5. Continually monitoring performance
The performance management system allows regular monitoring of an employee’s performance. Continually assessing an employee’s performance and giving them feedback accordingly helps employees stay aligned with the organizational goals.
Such a performance is measured with the key performance indicators (KPIs). It talks about the quality and efficiency of employee’s work. The data stored in the software speaks about the overall performance graph of an employee.
With the help of this data, superior managers can filter the employees eligible for incentives, promotions, and recognition, as well as the employees who need massive improvement in their work.
It represents their strengths, weaknesses, areas of improvement, and how much gap exists between their current performance and the expected performance. Once detected, this performance gap can be resolved within time through various training sessions to bring employees back on track.
6. Measure performance accurately
When measured accurately, the performance of an employee helps in the fair distribution of wages & making crucial decisions. It ensures that deserving employees get their benefits through incentives, gift vouchers, promotions, and other recognition & rewards. Such data-based accuracy, at the same time, helps to detect the non-performing employees in the company.
The companies can save their monetary & non-monetary employee benefits by detaining these employees from availing such benefits. They can be further trained to perform better in the future.
The performance of employees can be measured in the following ways:
- Define individual employees and the company’s objectives.
- Select the actionable performance metrics in the form of quantitative or qualitative indicators.
- Collect the raw information in the form of employee performance data through observations, surveys, feedback, ratings, punctuality, etc.
- Analyze the data & declare results by interpreting data in a meaningful manner.
- Review the employee performance for feedback based on analyzing SWOT (strengths, weaknesses, opportunities, and threats)
- Adjust the performance indicator plan for performance optimization & schedule training to improve employees’ skills.
7. Planning and goal setting
Use a performance management system to set out a clear plan regarding the performance of every employee. The software helps plan the qualities, expertise, and skills every employee should have to meet organizational goals.
This way, you can assign the correct daily tasks to every employee to ensure all their duties and responsibilities align with the organizational goals and mission. The performance management system is also essential for setting realistic, achievable, actionable employee goals.
It makes employees engaged and dedicated to striking better outcomes & enhanced productivity. Ensure that the individual employee’s goals align with the departmental and overall organizational goals. These objectives you set for the employees should be SMART as mentioned below:
- Specific
The objectives should be specific, explicit, and understandable regarding what’s expected of an employee.
- Measurable
The objective and progress graph of an employee should be measurable. Moreover, it should be easy to assess, evaluate, and provide quick results regularly.
- Agreed/Achievable
The objective should be achievable within a set time frame and reasonable enough for an employee to accomplish.
- Realistic/ Relevant
The objective should be realistic as per the long-term organizational goals and not hypothetical or based on assumptions. It should be within an employee’s capability, or else it’ll act as a de-motivating force for them.
- Time-Based
A precise time to accomplish the goals should be stated to the employees. Without a time constraint, employees will feel directionless and unable to achieve it anytime soon.
8. Providing performance feedback
Implementing the 360° feedback system in the company can drastically enhance the performance of employees. It can be done through peer-to-peer feedback, external stakeholders, senior manager ratings, etc.
Employees need guidance on what they are doing right and wrong and how to become better versions of themselves. Pointing out the mistakes at the right time is crucial to ensure the company’s success, as the employees will keep repeating the same mistake again & again, lowering their performance graph.
Conducting a performance feedback session can help employees assess their performance graph and correct it wherever required. As an employer, you can offer constructive feedback to the employees & conduct additional training & learning sessions to improve employees’ performances.
9. Appreciate employees’ work
Imagine working hard day and night by putting your heart & soul into the work and getting no appreciation. How discouraging would it be? Doesn’t it? Let’s solve this problem with the help of an effective performance management system. It is possible by appreciating employees for the most minor achievements, such as working on weekends, hitting targets before deadlines, taking minimal to no leaves, etc.
When you understand employees, they feel a part of the company and are urged to work even better daily. In the very same way, they might need more appreciation to achieve milestones. Appreciate employees one-on-one, in front of the team members and superiors. Here is what timely employee appreciation would lead to:
- Boosts employee morale
- Strengthened workplace relationships
- Enhance productivity
- Increase chances of retention
- Enhance employee engagement
- Feels valued in the company
10. Motivate the employees
“Motivation is an energy drink for the lethargic employees.” We are human beings, and we can’t function without a purpose and the right motivation provided at the right time.
Henceforth, regularly motivating employees through several intrinsic and extrinsic factors can significantly change their productivity level and commitment to the company.
This way, they will be punctual, engaged, and participative and go beyond their capacity to hit the targets. Ensure each employee feels motivated and belongs to the company through various things as mentioned below:
- Supporting them to achieve individual and shared goals
- Strong peer and manager relationships
- Making them feel important through different responsibilities
- Involving them in critical decision-making sessions
- Conducting employee empowerment activities
- Offering several career development and growth opportunities
- Providing them with earned leaves in times of need
- Giving recognition earned by them
- Attractive compensation and benefits
- Maintaining a healthy corporate culture
11. Development and training
The performance management system ensures timely employee development and training programs. Such programs allow employees to upskill themselves with the latest news, tools, and technologies. The activities conducted during these training and development sessions greatly enhance employees’ skills, knowledge, and intelligence. During these sessions, employees also get clear instructions and guidance from the professionals on improving their current performance and making them better in the future. It makes employees smarter, and as a result, they can use such smartness to enhance the individual and overall performance of the company. It’s a ladder for employees to quickly experience career growth and salary hikes. As a whole, it improves the company culture and heightens the chances of employee retention.
12. Define and describe each role
Various employees are hired based on their qualifications with no job orientation. It leads to employees working as per their wishes most of the time, outside the company’s favor.
It makes them feel lethargic and disengaged and wants to kill time in the office by taking massive breaks. Clear Job description and explanation play a vital role in ensuring an employee’s productivity. Most employees need clarification about what is expected from their jobs and how to perform them.
With the help of a performance management system, it gets easy to connect every employee with the things expected of them. Whether it’s the role of a sales executive, HR manager, legal consultant, or any other role, specifying the job meaning, duties, roles, and responsibilities, along with the explanation of how to implement them, brings a more significant positive change in employee performances.
Conclusion
The performance management system is undeniably crucial in the organization. It empowers employees to participate in their performance & learning management actively. The company can also closely look at who are the performing assets & non-performing assets, what is working for the organization & what needs changes.
According to this analysis, they can create learning & development programs for the non-performing employees to perform better moving ahead.
It also helps analyze the achievable goals and what better motivational events can be conducted to reinforce bad performers to become good performers and decent performers to outperformers. The company’s overall success will also heighten as soon as the individual employee performance improves. Henceforth, ensure that your organization has a reliable performance management system.
